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Brumby’s giant money pit

Published: The Age, 28-Aug-10
Author: Ben Schneiders and Royce Millar

Victoria’S $5.7billion desalination plant is as much as three months behind schedule and will struggle to meet a December 2011 deadline as heavy rain and unforeseen environmental problems dog the project.

Now, with reservoirs filling and taxpayers liable for hundreds of millions of dollars a year  to pay for the project, doubters  are questioning whether the  plant was a costly overreaction to Melbourne’s water woes.

News of mounting problems at the desal site near Wonthaggi in South Gippsland emerged as Premier John Brumby this week said improved rainfall and water infrastructure had allowed him to ease water restrictions  in Melbourne.

This week a senior government insider told The Age that with its time again, the government would probably not opt for such a large and costly desal plant.  Victoria’s is the largest plant of its type in the world.

Taxpayers will be liable for an annual security payment for the project, regardless of whether the government buys water from the plant. The government has refused to disclose the size of the payment but The Age believes it will be at least $300million annually.

Union and other industry sources say heavy rainfall, knee-deep mud and strong winds have set the project back many weeks with a major concrete pour  repeatedly delayed. One worker yesterday described the site as a ‘‘slush pit’’.

Australian Workers Union state secretary Cesar Melhem said the project was probably about four to six weeks behind schedule.  A senior industry source involved in the project put the delay at 12weeks at least.

The Age believes the consortium has discussed stepping up the use of labour when the weather clears and has informally flagged the introduction of afternoon and night shifts, to be paid at double time.

An additional hiccup at the desal site has been the EPA’s March discovery  that potentially dangerous acid sulphate soil had been disturbed and was threatening the nearby Lower Powlett River.

Former environmental manager for the project Sue Korecki told The Age that the acid sulphate problem was due to a lack of proper investigation during the government’s environmental effects study.

Project insiders say such problems and delays were always inevitable because of the unrealistic timeline imposed by the government.

‘‘There was a political end-date given,’’ said one senior industry source formerly involved in the desal plant. ‘‘Was it a realistic end-date? Of course it wasn’t.’’

Said Ms Korecki: ‘‘From my way of thinking it [the construction] should have been a five-year job, not two.’’

After denouncing the opposition’s plans for a desal plant one-third the size,  Labor backflipped in mid-2007 as drought gripped the state and announced that Victoria needed a plant to avert a water disaster.

Then, after the government awarded a contract to build and run the plant to the Aquasure consortium in July last year, it started to rain.

For the year to the end of August, Wonthaggi will have had more than 1000millimetres ofrain. This compares with 643millimetres for the same period in 2007. The historic average is 930millimetres.

In their bid to minimise industrial trouble and delays, the consortium has spent big on the desal workforce with The Age reporting in March that workers were being paid upwards of 25per cent more than the industry standard. A carpenter on a 56-hour week Brumby’s giant money pit: a tale of downpours, delays, mud and big wages could earn more than $200,000 a year. Insiders and experts alike agree that, while weeks behind schedule, the consortium will pull out all stops to meet the deadline and avoid onerous penalties for missing it.

Still, if the  plant fails to produce water in December next year, Melburnians — on current trends — are unlikely to go thirsty. Melbourne is in the grip of its wettest winter in 11years. The city  has received 156millimetres of rain so far this winter, above the average of 147millimetres.

Deputy Opposition Leader and South Gippsland MP Peter Ryan said the government panicked in 2007. ‘‘Now we’ve got this massive white elephant down the coast, three times  as big as the one they swore they’d never build.  All of this and an absence of using some contemporary technology for  capturing and recycling, let alone capturing stormwater.’’

Mr Ryan said Victorians now faced big price  rises with an increasing proportion of water bills due to the costs of water infrastructure projects  rather than water itself.

In June, Aquasure chairwoman Chloe Munro confirmed that the government was not obliged to buy water from the plant. But she also told a parliamentary committee that taxpayers would pay an annual security payment for the project.  ‘‘This payment  recognises that the plant is being maintained to be in a condition capable of delivering water at any time,’’ she said.

The government has steadfastly refused to disclose the level of the water security payment. Back-of-the-envelope estimates by both The Age and  The Australian Financial Review  indicate annual payments of at least $300million for the luxury of having the plant.

The government has not disputed this figure.

Aquasure spokeswoman Serena Middleton did not deny significant delays but  told The Age the project was on schedule to be completed by the end of 2011.  ‘‘Winter presents the same challenges for us as it does any other construction project. Planning for this is a standard practice and we work through any challenges that arise along the way.

‘‘Like all big projects, rain is factored into the construction schedule and the soil conditions at the site presented an early challenge but has not impacted on the project program.’’

Mr Melhem told The Age that as a result of the delays, ‘‘I think there’s some discussions about doing different shift arrangements as weather picks up and unions will facilitate that.’’

But Ms Middleton denied the consortium had flagged afternoon and night shifts at double time. ‘‘We had always envisaged the need for flexible working arrangements, which is why they were negotiated into the EBA at the start of the project.’’

Government spokesman  Luke Enright said:  ‘‘The company building the desalination plant has made it clear the project remains on time and on budget.

“The desalination plant is vital if we are to provide water security for Melbourne, Geelong and regional towns for decades to come.’’


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